Buying or selling a home
Your home could be your most valuable asset as well as your largest single monthly expense. These resources will help you manage the process.
When buying, keep in mind:
Estimate your mortgage principal and interest payments
- Think about how much money you have available to make your down payment.
- Figure out how much you can reasonably pay each month for your mortgage, property taxes and homeowners insurance. This number will normally be the size of the check you will have to write each month as your mortgage payment, and it will give you an idea of how large a loan you may be able to support. Keep in mind that many lenders expect your monthly payment to be less than some specific percentage limit, often 28–33 percent of your gross monthly income.
- Estimate what your mortgage principal and interest payments would be, remembering that for any given interest rate, a longer-term loan will cost you less each month but add up to more total cost in the long run.
Consider other housing expenses, such as taxes and homeowners insurance
- Look carefully at the real estate taxes for the property. In some areas, all real estate taxes go to the city or town. But in others, there may be separate taxes for the local government and the schools, as well as for regional agencies such as water supply or sewage districts.
- Homeowners insurance costs can vary widely. You may be able to use the home seller’s current bill as an approximation for your budget.
- Add up all utilities you’re likely to need—energy costs (natural or propane gas, electricity and oil), water and sewer, telephone, broadband internet, and cable or satellite television.
- Condos and cooperatives generally assess monthly fees for common expenses. Some subdivisions have homeowners’ association dues for maintaining common resources. You’ll need to account for these fees in your cost estimates.
Budget for secondary costs
- Commuting costs can add up, especially for longer trips.
- Any home needs maintenance. Painting, roofing and masonry work may only be required every few years, but when necessary, these jobs may cost thousands of dollars. Appliances and heating and cooling systems likewise require both periodic repairs and occasional replacements.
- Renovation is a much bigger effort than maintenance. If you think you’ll really need an updated kitchen or a new bathroom, budget immediately for it or increase your mortgage amount enough to cover it.
- Some properties may have fees for optional recreational resources such as golf courses, health clubs or skiing. If you intend to use any optional resources, you should budget for them.
When selling, keep in mind:
Know all of the elements of your bottom line
- Determine payoff amounts for all loans tied to your property:
-Home equity lines of credit (HELOCs)
- Identify any liens for items such as unpaid taxes, mechanic’s liens and unsatisfied judgments.
- Estimate transaction-related costs such as sales commissions and fees, legal and advisory fees and the costs of preparing the property for sale.
Evaluate market conditions in your area
- Determine whether you might be in a seller’s market or a buyer’s market. Indicators include a rising (or falling) number of listings in your area, how quickly an average home stays on the market before it is sold and whether the average house is selling at a significant discount from its listing price.
- Evaluate the impact of nearby development activity. Among the projects that could have an impact are new industrial parks, shopping malls, schools, and hospital or medical facilities. Keep in mind that new facilities could attract some potential buyers while deterring others.
- Consider the potential effects of nearby mass transit and highway construction projects.
Research your home’s current value
- See what nearby homes have sold for in recent months. You should focus on those most similar in size and quality to yours.
-Look for homes that have similar amounts of interior space and yard space, with a similar number of bedrooms, bathrooms and fireplaces.
-Consider factors that could affect a home’s market potential, such as a historic property designation, central air conditioning, lawn sprinklers, swimming pools, connections to public water supply and sewer service, outbuildings such as sheds and barns, and proximity to parks, schools, recreational facilities and conservation land. Also potentially adding value are energy-saving heating and cooling systems, water conservation systems and solar panels.
- Comparison shop to see the homes that might be competing with yours for potential buyers’ attention.
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